A new trade deal between the Australian and Indian Governments could come of a benefit for Yarra Valley wineries who are looking to export their blends.
When the Australia–India Economic Cooperation and Trade Agreement (AI ECTA) enters into force, preferential tariff treatment will be afforded to premium Australian wine imported to India, making Australia the first major wine producing country to negotiate such arrangements.
Wine Australia has welcomed the announcement, seeing the market a viable option for new winemakers to export as Indian consumers discover and learn more about Australian wine.
“There is potential for growth in the sale and consumption of Australian wine in India with Australia already having the greatest share of the imported wine market,” Wine Australia General Manager Corporate Affairs and Regulation Rachel Triggs said.
“In particular, the AI ECTA will make India a more viable proposition for small to medium winemakers who have not previously contemplated entering into that market.
Through the AI ECTA, India has also agreed to extend any preferential arrangements for wine afforded to other trading partners in future to Australian wine.
“The strengthening of the relationship between India and Australia through the AI ECTA creates an excellent platform upon which we can pursue a meaningful dialogue with India about regulatory and technical matters relating to the trade in wine.
In the 12 months to the end of December 2021, Australian wine exports to India increased by 81 per cent in value to $12 million – a record value of Australian wine exports to India. Volume also increased by 71 per cent to 2.5 million litres, and 74 per cent of this volume of wine was red wine.
The common customs tariff on wine imported to India is 150 per cent, making it a challenging market for imported wine.
In accordance with the AI ECTA, tariffs on Australian wine with a cost, insurance and freight (CIF) value of over US$5 per 750ml bottle will decrease to 100 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 50 per cent. Tariffs on Australian wine with a CIF value of over US$15 per 750ml bottle will decrease to 75 per cent upon entry into force, with a further phased reduction of 5 per cent per year for 10 years down to 25 per cent.
Wine in India – fast facts
According to IWSR, Australian wine held a 42 per cent value share of the imported wine category in India in 2020, well ahead of Italy (14 per cent), France (12 per cent) and Chile (11 per cent).
IWSR reports that 72 per cent of the volume of wine consumed in India is produced domestically.
Euromonitor International reports that a rising middle class, increasing urbanisation, an inclination towards imported wine, and a shift in consumer preferences from hard spirits towards wine are expected to drive wine consumption in the forecast period, which is predicted to reach 55.5 million litres by 2025, up from 29.2 million litres in 2020.
Euromonitor International reports that the most popular red wines in India include Cabernet Sauvignon and Shiraz, while for white wine Chenin Blanc and Sauvignon Blanc are popular.
